Could the next global recession take place in 2018 or 2019?

Economic trends are very difficult to predict accurately – which is why they are sometimes wrong. What we do know however is that since World War 2, recessions have generally occurred every 5-10 years, following general business cycles.

Below is a chart I assembled that shows the unemployment rate in the Province of Ontario for every month since January 1976.

Ontario Unemp

The red line represents Ontario’s unemployment rate, while the grey blocks represent the duration of recessions since the 1970s. What is clear is that there have been 4 recessions, roughly 10 years apart from each other since 1976. During the recessions, we see the unemployment rate rising, with some fairly pronounced spikes in the early 1980s, the early 1990s and the recession of 2008/2009. Interestingly enough, the dot com bubble of the 2000s wasn’t as severe in terms of its impact on the unemployment rate in Ontario.

  • One positive trend I take away from this chart is the consistent and resilient recoveries following each recession
  • One potentially ominous trend I take away from this chart is that it appears like a recession is right around the corner, and could occur in 2018 or 2019

But as the first line of this article states, economic trends are very difficult to predict accurately, and I didn’t undertake any technical analysis to arrive at my assumption/prediction, therefore keep in mind that I could be wrong.

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How Ontario Grows

There is a dataset on Statistics Canada that summarizes the components of population growth for the country, and provinces and territories themselves. I decided to collect the data for Ontario to examine what contributed to population growth over the last 30 years.

The three major components of population growth in Ontario are –

  1. Natural Increase
    • Determined by subtracting Deaths from Births
  2. Net International Migrants
    • Determined by subtracting Emigrants from Immigrants + Non-Permanent Residents
  3. Net Interprovincial Migrants
    • Determined by subtracting Out-Migrants from In-Migrants

The three major components of population growth in Ontario since 1971 are shown in figure 1 below.

Figure 1 – Components of Population Growth in Ontario, 1971 – 2016
All COmponents

As with most industrialized countries, the natural increase has been falling for a number of decades as people are marrying later and having fewer children, and due to graying demographics. In contrast are Ontario’s immigration levels (shown as the red line in figure 1 above), which have skyrocketed since the 1980s in response to a declining natural increase, and have accounted for the majority of population growth in Ontario over the last two decades. Finally, the smallest contributor to Ontario’s population growth has been interprovincial migration, which interestingly appeared to have an inverse relationship with immigration levels during the 1970s and 1980s.


The next few charts show the individual components of population growth –

Figure 2 – Annual Births and Deaths in Ontario, 1971 – 2016
Births Deaths

Interesting ebb and flow with annual births in Ontario since the 1970s. If you were to extend the data further back to the 1940s, you would see three “baby booms” –

  • One during the 1950s and early 1960s (known as the baby boom generation);
  • One during the 1980s and early 1990s (known as the millennial generation); and,
  • One we are currently in the midst of (children of the millennial generation?).

Figure 3 – Annual Immigration and Emigration Levels in Ontario, 1971 – 2016
Immigration Emigration

Immigration levels surged during the 1980s likely due to the Immigration Act and the Multiculturalism Act, as well as robust economic conditions in Ontario. The uptick in immigration levels over the last two years is due to the large numbers of non-permanent residents. Non-permanent residents also contributed significantly to the growing immigration levels during the 1980s.

Figure 4 – Annual In- and Out-Migration Levels in Ontario, 1971 – 2016
In and Out Migrants

Another interesting cyclical trend is evident when looking at interprovincial migration in and out of Ontario since the 1970s. The 1980s saw huge interprovincial migration into Ontario mostly from Quebec, Alberta and BC. The 2000s saw exodus of Ontarians into other provinces, namely Alberta. Lately however, there has been an uptick of interprovincial migration into Ontario. For instance, the recent drop in oil prices resulted in a growing number of Albertans moving to Ontario.


And finally, a chart showing the net annual population growth in Ontario –

Figure 5 – Annual Net Population Growth in Ontario, 1971 – 2016
Net Pop

 

Toronto’s Population since the 1800s

I dug up several interesting datasets from Statistics Canada on the population of Toronto for various census periods since the 1800s. The chart below shows the population of the Toronto CMA for every year since 1821 (keep in mind I had to estimate population for some years in between the “census” periods).

Figure 1 – Toronto CMA Population, 1821 – 2016
Toronto Pop 1800 - 2016

Figure 2 – Year over Year Population Change of Toronto CMA, 1821 – 2016
Toronto Pop % 1800 - 2016

I take away four major things from looking at these charts –

  1. Toronto is a fairly young city (region)! I think Toronto’s Chief Planner, Jennifer Keesmaat said it best – “We’re still building Toronto!
  2. Toronto is a constantly growing and changing city (region). Don’t expect things to stay the same. Don’t expect your neighbourhood or neighbours to look the same. So embrace the change!
    • In fact, it’s quite funny when you read news articles or watch video clips about the City from 20, 30, or 70 years ago – you will see almost identical issues over and over again – too much growth; too much congestion/traffic; house prices too high; this city will fall apart if we don’t take any action; how will my children ever afford homes in Toronto?
  3. It is evident from the second chart that significant population spikes happened several times throughout the city’s history. Most notably in the 1820s, the 1830s, the 1880s, early 1900s, the 1950s and a smaller spike in the 1980s.
  4. There was a decline in population in only 10 of the 200 years of available population data for the Toronto CMA.
    • Put another way, throughout 95% of its history, Toronto was growing.

I can’t with authority explain what happened at each of the individual periods to cause the population to spike, but I can take a stab at a few –

  1. 1880s I assume could be due to confederation;
  2. 1950s is likely due to the postwar baby boom and immigration;
  3. 1980s is likely due to strong economic growth, influx of immigrants, fear of Quebec leaving the country, etc.

I am however very curious as to what explains population spikes during the other periods, and would love to know from any of my readers whether they can explain the other population spikes, or further elaborate on the ones I attempted to explain.


Below are some additional charts that show population growth and annual percent change broken up by (roughly) hundred year periods – 1) 1821 – 1900, and 2) 1901 – 2016, to give some context as to the happenings in each individual century.

Figure 3 – Toronto CMA Population, 1821 – 1900
Toronto Pop 1800 - 1900

Figure 4 – Toronto CMA Population, 1901 – 2016
Toronto Pop 1900 - 2016

Figure 5 – Year over Year Population Change of Toronto CMA, 1821 – 1900
Toronto Pop % 1800 - 1900

Figure 6 – Year over Year Population Change of Toronto CMA, 1901 – 2016
Toronto Pop % 1900 - 2016


Sources:

Statistics Canada, Census of Canada – pre 1971
http://eco.canadiana.ca/

Statistics Canada, Census of Canada – 1971 – 2016